Our research process aims to aid your UK property purchase.
To assist expats purchase residential properties, a range of residential mortgages are available and can be arranged through a variety of lenders in the UK. These residential mortgages are for homes in the UK where you or your immediate family will live.
The fact that you are based abroad will certainly impose certain restrictions with some lenders, however, if your partner and / or dependents are based in the UK and you will be purchasing a family home for their use, there may be mortgage solutions available to you. The lending decision will certainly depend on the country you are based in, how you are employed, who you are employed by and the currency you receive your income in.
You may generally be required to put down a larger deposit than for other UK residents and, although a handful of lenders can consider providing you with a mortgage based on you putting down a 10% deposit, most require at least 20%; with more borrowing options opening up to you if you put down larger deposits still.
Mortgage affordability assessments are very detailed these days, particularly following Regulatory changes to the overall mortgage marketplace. All potential mortgagors need to complete detailed budget planners, providing confirmation of their income and expenditure - before any Bank or Building Society can make a lending decision. If you are paid in a foreign currency, lenders are also obliged to make detailed assessments taking into account potential fluctuations in exchange rates.
Key to the Regulatory changes affecting expats is The Mortgage Credit Directive (MCD) which came into force in March 2016. Most importantly, if you are not paid in Sterling, your mortgage will be classed as a foreign currency loan and there are specific rules that lenders must now abide by:
Where an MCD regulated mortgage contract relates to a foreign currency loan, […] the MCD mortgage lender must ensure:
(1) the consumer has a right to convert the MCD regulated mortgage contract into an alternative currency under specified conditions; or
(2) there are other arrangements in place to limit the exchange rate risk to which the consumer is exposed under the MCD regulated mortgage contract.
What this means in plain English is that if you take out a foreign currency mortgage and the exchange rate between the two currencies moves by more than 20% for example, you may have the right to move your mortgage to an alternative currency, particularly if you can prove it is no longer affordable. Alternatively, if the lender could cap your risk, for example if the exchange rate has gone up by 25%, the lender can agree to cap the amount payable to no more than 20%. This means that the lender has to share the risk of any currency fluctuation.
Here at Cherry Mortgage & Finance, we have the experience, specialist knowledge and access to a wide-range of mortgage lenders to help you find the right mortgage to suit your particular requirements and circumstances. Download our helpful guide here or contact us today to see how we can help.
If a mortgage is denominated in a currency other than your home currency, there is a risk that changes in the exchange rate may increase the equivalent value of the debt in terms of your home currency.